BITCOIN

silvercue

MeteredOut said:

The thing about anything that is driven by the greater fool theory is that it is those who have “made money” (mostly on paper) who make the noise, driving further FOMO, as evidenced by this thread when the price is rising as opposed to falling.

Prices of stocks rise and fall.  Some go to almost worthless.  The same FOMO happens with companies like NVIDIA and TESLA a couple of years ago, both over-valued according to many analysts, but they ignore the TA and keep going.

I have a diversified investment portfolio.  Last year I made over 50% profit on my stocks and shares portfolio, which is the best I have done so far, but that is "mostly on paper" as I have sold very little.     I always make more on crypto than anything else.  People can call it what they want.  Gambling is a common phrase, but in my experience it is about weighing up risk v reward.  It is higher risk but rewards are higher, generally speaking.   I actually think if you research well enough and avoid trying to make money on small caps, then the risk is not really any greater than stocks.  Certainly not in my experience.

People do tend to be more vocal when things are going well, that is down to a level of excitement I think and I see exactly the same with stocks - AI being a perfect example.    Just get an eToro account and you will see that FOMO in overdrive!

DannyCarey

Frequentlyhere said:

RichTips said:

"UK regulators to allow crypto-related securities"

"Bitcoin bulls are not the bigger fools"

Not my words. They're both from the FT, today.

That second one is an opinion piece, and honestly doesn't seem to have any more solid ground than "price goes up, so I guess it good".
It actually fairly systematically debunks any utility in bitcoin, but then finishes "There is an old Wall Street saying for moments like this: only the fools are dancing, but the bigger fools are watching"

Which is about as posh a version of 'FOMO' as I've seen.

To be honest though, if people like @scottex99 ,who seem to have their eyes open about the risks and spend little time talking about the supposed real world utility of the thing, then fair play to them.

The things I still mainly don't like about it are:

1) The real world bad things - funding crime, harm to environment.
2) The harm to less wise people who are sucked into  propagandising about price/utility.
3) The deception/outright lying that some do - "Bitcoin is good for the environment" " More fraud in the US dollar" I find very grating still.
4) Kind of linked to the above, this thing where the price goes up and suddenly ordinary PF boards are infiltrated with giddy excitement of fervent speculators, who then retreat like crabs into the rocks when the tide comes in.

Though in fairness I do think 3) and 4) are declining somewhat (unless this run goes on much longer perhaps!).

A bit like all the naysayers staying quiet in a bull market too? Other than coming along and being bitter of course... 

or sneering after a drop... 

RolandFlagg

Most people don't understand this, and it's getting too late for them because the ETFS, MSTR and Nation States are buying up all the supply.

Frequentlyhere

Danny, this thread was dead as a doornail from both cynics and fans for months, the only thing that stimulates conversation is the price rising, and then it's the fans starting the conversation.

Though I don't think this thread is particularly bad for shilling for the most part to be honest. It's more PF forums on reddit I'm talking about.

I'm not bitter, good luck to you guys as you seem fairly well adjusted and prepared for the ups and downs. 

 It's the other specific concerns I raised that I take issue with ( well exemplified by the most recent comment before this one, but I won't even bother commenting on it!). 

User232002

Frequentlyhere said:

The things I still mainly don't like about it are:

1) The real world bad things - funding crime, harm to environment.

Just because you believe in them doesn't make them real.

Frequentlyhere said:

2) The harm to less wise people who are sucked into  propagandising about price/utility.

Stupid people will lose their money in many ways. The traditional financial system doesn't protect them from much of this either.

Frequentlyhere said:

3) The deception/outright lying that some do - "Bitcoin is good for the environment" " 

Villages in Africa have the lights on because of Bitcoin mining: https://www.coindesk.com/consensus-magazine/2023/04/17/gridless-mining-extends-power-in-africa/

This hydroelectric plant will be able to provide affordable electricity to the neighboring village and is unobtrusive to the surrounding ecology. Gridless is able to do this because whatever electricity the village doesn’t use will be used for mining bitcoin. The cost of the energy paid to mine the bitcoin will more than offset any losses associated with providing the electricity to the village since instead of being wasted, it will actually be used.

So while a mainline criticism of bitcoin is that it requires too much electricity to work, here’s a tangible example of a rural community enjoying access to electricity because of bitcoin mining. These Kenyans now have access to electricity because of bitcoin, not in spite of bitcoin. Gridless is cutting into that 770 million without electrical power one bitcoin-enabled microgrid at a time.

As for the environmental concern associated with bitcoin mining’s dependence on energy that’s often repeated, providing access to electricity where it wasn’t possible before should surely outweigh whatever moral weighing a critic has for green energy production. Besides, hydroelectric power is renewable.

Kinda like someone came here years ago and told you that game theory incentives made Bitcoin miners an excellent and mutually beneficial companion for building out renewable electricity grids, eh?

But this won't happen in developed nations right? Texas shows otherwise; https://www.cnbc.com/2023/09/06/texas-paid-bitcoin-miner-riot-31point7-million-to-shut-down-in-august.html

Before you ask me why a state entity paying a Bitcoin miner to not use electricity can possibly be good for the environment, how about doing a little thinking....

Frequentlyhere said:

3) The deception/outright lying that some do -  " More fraud in the US dollar" I find very grating still.

https://www.forbes.com/sites/digital-assets/2023/06/03/crypto-isnt-criminal-and-us-policy-should-reflect-that/

Despite allegations of crypto being the preferred tool for nation-states and other large scale criminal enterprises to use, U.S. officials have testified directly against this idea. In April 2022, Treasury Secretary Janet Yellen testified that it would be hard for an economy, or any large scale operations (private sector or governmental) to use crypto to evade sanctions. Specifically, her testimony discussed the reality that large transactions would be easily traced on the underlying blockchain, and that the Treasury Department had not seen significant evasion via crypto as of that date.

It is also important to note that the 2022 National Terrorist Risk Financing Assessment revealed that while crypto was, and is, being used by criminal and terror organizations, that the use appears limited when compared to traditional financial instruments. The report also makes note of the fact that these traditional financial instruments, including the U.S. dollar, remain the tool of choice for criminal and terror financing.

Another allegation that is commonly lobbed at the crypto sector is that, because of the underlying blockchain technology, transactions and information are unable to be obtained for investigative purposes. This is precisely the opposite of the reality with regards to current market research. Reviewing Chainalysis reports from 2021 and 2022, the trend is clear; the percentage of crypto transactions involving criminal actors is decreasing rather than increasing as overall volume of transactions continues to increase.

Frequentlyhere said:

4) Kind of linked to the above, this thing where the price goes up and suddenly ordinary PF boards are infiltrated with giddy excitement of fervent speculators, who then retreat like crabs into the rocks when the tide comes in.

Just when did that tide come in exactly? Bitcoin hit $20k in Dec 2020 and has been no more than 20% below that since that date. That period that you refer to as 'the tide coming in' was when I publicly posted that I was buying more. That purchase is now up 3.5x. Measuring from the ATH and thinking that $70k to $16k in a year was a 'crash' when it was at $10k a year before that is just bad analysis. Not to mention the audacity of talking about the tide coming in at a time when the asset is currently at ATH.

I keep thinking that people can't keep failing this maths test over and over, but I am starting to think I may be wrong. I'll finish with this from a frequent poster in this thread;

Malthusian said:

As for Bitcoin - the people behind it cashed out years ago, took the money and ran. All that is left is the equivalent of people in a collapsed pyramid scheme still dutifully trudging door to door, trying to flog the boxes of self help products or soap that are cluttering up the living room.

Sounds like something that could have been posted in this thread last week right? It was posted on 6th November 2015.

Price of Bitcoin on that date? $400.

User232002

And I do apologise for overdoing the Bitcoin thread, as you so eloquently put it. But here's a great post from 16th June 2022;

Frequentlyhere said:

I'm overdoing the bitcoin thread today, but I do find it interesting.

I think with the history you've refreshed us on, I'm starting to see why you feel the way you do.

In buying lots of BTC in April 2020, you feel vindicated by the idea of escaping the consequences of the FED's money printing with how much it has soared in value against the $. Your thesis seems to have been correct.

In my view though, your thesis is faulty. You did well, but not really for the reasons you bought it for. You're in a not much different position to the spec-tech investors going big on Peloton and Zoom and ARKK. You've ridden the wave of a hyper-accommodative monetary policy, which is now being reversed. 

Bitcoin currently at $70k and interest rates at 5%. What a time to be alive.

And that near bottom tick public purchase of Bitcoin at $18-$19k is looking like I somehow managed to get extremely lucky, twice? 

Frequentlyhere said:

Whilst I suppose it could still theoretically be correct, the difficult position your thesis has is that it's currently being systematically dismantled.

It's falling just like a tool of rampant speculation would.
Inflation is becoming worse, but Bitcoin is falling harder. 
A war started in Ukraine, and people fled to Gold, not Bitcoin.
It's not becoming less volatile, it's becoming more.

I think at this stage, everything has to go in reverse for your competing idea to be right. It's not enough for people not to trust the FED and go through a recession to suddenly love bitcoin. What's happening right now shows that. They also have to find a reason to believe in Bitcoin.

Narrator: Shortly after this post, everything did indeed go in reverse.

What was that about a thesis being systematically dismantled?

Scottex99

MeteredOut said:

The thing about anything that is driven by the greater fool theory is that it is those who have “made money” (mostly on paper) who make the noise, driving further FOMO, as evidenced by this thread when the price is rising as opposed to falling.

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.

Of course some the $2.7tn is made up of nonsense junk and it's by no means a sure thing.

But it would personally drive me bananas if I didn't have a bit, even as a hedge.

If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

It's much noisier elsewhere and there's actually some sensible discussion here in both the for and against camp. Anyone older than 25 years old claiming they are going "all in" on anything isn't likely to do well long term.

Paper profits is a relevant response as I've alluded to myself for previous cycles. Again people talking about how rich they are and the counter being "well not yet until it's in your bank" is time-wasting on both sides.

I actually took a bit of profit this weekend to prep myself for doing it later this year. What I can say is my current portfolio is approx 10-100x what friends my age (40) have in their traditional S&S accounts. Some have good salaries, some dont.

I believe in crypto in it's various forms and had conviction to buy more all the way down to $16k and back up again. Now it's time for a little pat on the back and suss out if there is anything scary around the corner whilst considering the exit plan.

Frequentlyhere

Honestly I think the greater fools here are people not having a small allocation to the fastest growing asset class of all time.
If some new metal appears called SUPER CONDUCTOR ALLOYIUM and after 5-10 years it's being mentioned everywhere, had certain properties, and companies were trading it in the billions, I'd have a look even if I didn't agree it was the "best metal of all time".

I totally get what you mean. If we put aside the points I've already mentioned for the moment, then the reason why I personally still wouldn't is largely because my investing aims are different to yours.

From the way you talk about buying/selling and being willing to lose it all, it seems pretty clear you're open to taking on a lot of risk with whatever money you have in bitcoin. 

In my case, I've followed down the FIRE path and built up wealth steadily via the usual tedious equity trackers, which of course themselves can be volatile. I'm definitely not willing to lose it all, and being able to lose 50% of my net wealth over a year or so is more than enough volatility for me. 

I could still buy a small allocation for bitcoin but for FIRE purposes the problem is that it's behaviour is far too unpredictable. I even have some gold, but I'm pretty damn sure that's not going to fall 90%, which bitcoin might. Or who knows, maybe some Quantam hack will end it all in one go? I'm not prepared to take that on. There's also still the risk of it all being nicked, which even the ETFs don't entirely avoid due to their caveats. 

You say 'certain properties' but it's been 14 years. Those properties are still far far less certain than gold, which is the closest thing I can compare it to (but obvs not the same).

I invest in gold itself holding my nose somewhat by the way as it's price outweighs it's actual utility by a great deal, but it does add just a twist of useful volatility to my portfolio. BTC, even shorn of it's environmental/crime/security issues is still a bridge too far for me.

Frequentlyhere

Funnily enough this tweet from a random financial journalist just rolled past for me. If here is more civil than Reddit, twitter makes Reddit look positively overabundantly polite.

TLDR; financial journalist says it's the Bitcoin evangelism that makes her worried - cue onslaught of intense and varied "you don't understand" type comments, direct personal insults etc, mostly from people who have based their entire twitter profile around Bitcoin. 

Again, not trying to say people here are like that. Still, I really hope that part of the scene dies out at some point.

Frequentlyhere

Sorry, I'm spamming myself a bit now, but also interesting to check in again with Yougov re: crypto, there's some mildly interesting data here.

I think you can see this data in whatever light you like really.

A cynic might note that still only 10-11% of British adults have invested in crypto incl. Bitcoin. On the other hand, that's doubled since Aug 2020 from 5%.

If you filter out the boomers and look at 25-49 year olds, then that number is as high as 18%, but strangely falls from 18 to 14% from August 2023 to January 2024, which is odd considering the price was rising steadily during that period. I have no idea whether there's anything to be read into that, or perhaps just an anomaly.

Of course this is just the UK anyway which doesn't make much of a dent in prices overall I imagine.